What is Spread in Forex
In forex trading, the spread is the primary cost of entering a trade, aside from any commissions. It is measured in pips, which is the smallest price movement in a currency pair. For most major pairs like EUR/USD, 1 pip equals 0.0001. So, if the spread is 2 pips, you need the market to move at least 2 pips in your favor before you break even. For Belarus traders using USD-denominated accounts, the cost per pip depends on your lot size. A standard lot (100,000 units) has a pip value of $10, so a 2-pip spread costs $20 per trade. Mini lots (10,000 units) cost $2 per pip, and micro lots (1,000 units) cost $0.20 per pip. Spreads can be fixed or variable. Fixed spreads remain constant regardless of market conditions, which is helpful for planning costs. Variable spreads fluctuate based on liquidity and volatility, often tightening during major trading sessions and widening during news events. For example, during the overlap of London and New York sessions, EUR/USD spreads may drop to 0.5 pips on ECN accounts. However, during Belarusian evenings (when Asian markets are open), spreads may widen. As a retail trader in Belarus, you should choose a broker that offers tight spreads on the pairs you trade most, such as EUR/USD, GBP/USD, or USD/JPY. Also, consider the spread in relation to your trading style: scalpers need ultra-tight spreads, while swing traders can tolerate wider ones. Always compare spreads across brokers and account types before funding your account via Skrill or USDT.